Adjudication vs the law

Court cases on adjudication are now arriving thick and fast. Until now, the courts have been concerned with attempts to enforce adjudicators' decisions, and attempts by unsuccessful parties to frustrate the process. However, the recent Scottish case of Allied London and Scottish Properties vs Riverbrae is the first in which a court has been asked to review the adjudicator's decision itself. The upshot of the case – the court upheld the adjudicator's decision – was welcomed as supporting adjudication. However, it also established clear limits on what an adjudicator can do.

The contractor, Riverbrae, raised adjudications against the employer, Allied London and Scottish Properties, under four separate contracts. The adjudications were heard together and were dealt with under the Scottish Scheme for Construction Contracts. John Spencely, an architect and experienced arbiter, was appointed adjudicator.

Riverbrae sought payment of more than £170 000 that had been certified as due under four separate contracts. Allied refused to pay. In the adjudications, it argued that it had claims under other contracts that could "set off" the sums due to Riverbrae.

Spencely held in Riverbrae's favour and ordered payment to be made within 14 days. Allied did not make payment. Instead, it raised an action in the Court of Session in Edinburgh for judicial review of the adjudicator's decision to order payment within 14 days. It argued that he ought to have considered other possibilities, including suspending the order for payment until Allied's claims had been resolved. His apparent failure to do so constituted an error going to the root of his jurisdiction, so entitling the court to overturn the decision.

In a decision issued on 12 July, the court rejected Allied's arguments. The adjudicator could have considered alternatives to immediate payment, but he was not bound to do so when those alternatives had not been suggested to him.

• Adjudicators’ decisions must have a sound legal basis

• They may require a legal adviser

• Some procedures allow the the level of legal accuracy to be relaxed, but others don’t

Adjudicators will at first glance be relieved by this decision. The court has not required them to consider the range of possible disposals that would be open to them – whether or not they had been suggested by the parties. Under the pressure of the procedure's tight timetable, this would have been an intolerable burden.

However, as wide as the adjudicator's powers may be (and this was acknowledged by the court) he or she is restricted in exercising them to cases where they are supported by a suitable legal basis. Lord Kingarth said of the adjudicator: "Having decided that the respondents were entitled to payment of the sums they claimed … and having no duty, and no right, to investigate and assess these latter claims, I consider that he could not logically, or lawfully, have made an order postponing payment … Whatever wide powers may be given to adjudicators to facilitate speedy resolution of disputes, no power is given to make decisions contrary to the rights or obligations of the parties arising as a matter of law."

This puts paid to the suggestion, made by some, that adjudicators can dispense a "rough-and-ready" form of justice without regard to the parties' legal rights.

There are few construction disputes that do not involve some legal issue. The dilemma faced by adjudicators is that they may be asked by the parties to determine complex questions of law very quickly. Some adjudication procedures attempt to deal with this by permitting the adjudicator to take a "fair and reasonable view" where it appears impossible to reach a concluded view on legal entitlements. Other procedures – including the statutory Schemes for Construction Contracts – contain no such "relaxation".